A Texas oil firm, Sable Offshore Corp, led by James Flores, is facing challenges in restarting crude oil production and sales from three platforms in federal waters offshore Santa Barbara, California. The state’s opposition and lawsuits have prompted Sable to propose an alternative plan to ship oil via shuttle tankers operating in federal waters only, bypassing California’s regulatory agencies.
Despite the support of the Trump Administration for federal oil-producing projects, Sable is encountering numerous lawsuits from California, risking financial strain and potential default on a loan. Sable acquired the platforms from ExxonMobil in 2021, with a significant loan from the U.S. supermajor, but California’s stringent regulations have impeded the restart of operations.
The platforms were shut down in 2015 following an oil spill that caused environmental damage and wildlife fatalities. Sable’s struggles with California’s legal battles have led to a plummet in stock prices and allegations of insider trading against Flores. The company’s alternative offtake strategy, utilizing shuttle tankers, aims to transport oil from offshore platforms without the need for onshore pipelines.
California’s relentless lawsuits against Sable include environmental violations and non-compliance with safety regulations. Attorney General Rob Bonta has filed a lawsuit over water law violations during pipeline repairs, accusing Sable of prioritizing profits over environmental protection. The company is also in litigation with the California Coastal Commission, facing fines and seeking damages for delays in pipeline restart.
Sable’s persistence in restarting offshore oil production in California contrasts with industry trends, as many companies have exited the state due to regulatory and reputational risks. Experts predict prolonged litigation and challenges from California’s agencies, indicating a bleak outlook for Sable’s production plans. Despite the hurdles, Sable remains committed to its offshore project, aiming to stabilize local refineries and provide economic relief to California residents.
In conclusion, Sable’s uphill battle with California highlights the complexities and risks of operating in the state’s oil industry. The company’s determination to overcome regulatory obstacles underscores the challenges and uncertainties faced by oil firms in California’s inhospitable environment.
By Tsvetana Paraskova for Oilprice.com
